Mercury Insurance 2008 Annual Report Download - page 77

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67
The following table presents information about the Company’ s assets and liabilities measured at fair value on a recurring
basis as of December 31, 2008, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to
determine such fair value:
Quoted Prices in Active
Markets for Identical
Assets (Level 1)
Significant Other
Observable
Inputs (Level 2)
Significant
Unobservable
Inputs (Level 3)
Balance as of
December 31, 2008
Assets
Fixed maturity securities:
U.S. government bonds and agencies 9,898$ -$ -$ 9,898$
Municipal securities - 2,184,684 2,984 2,187,668
Mortgage-backed securities - 202,326 - 202,326
Corporate securities - 65,727 - 65,727
Redeemable preferred stock - 16,054 - 16,054
Equity securities:
Common stock:
Public utilities 39,148 - - 39,148
Banks, trusts and insurance companies 11,328 - - 11,328
Industrial and other 186,294 - - 186,294
Non-redeemable preferred stock - 10,621 - 10,621
Short-term investments 204,756 - - 204,756
Derivative contracts - 13,046 - 13,046
Total assets at fair value 451,424$ 2,492,458$ 2,984$ 2,946,866$
Liabilities
Notes payable -$ 139,276$ -$ 139,276$
Derivative contracts 2,803 - - 2,803
Other 2,492 - - 2,492
Total liabilities at fair value 5,295$ 139,276$ -$ 144,571$
(in thousands)
As required by SFAS No. 157, when the inputs used to measure fair value fall within different levels of the hierarchy, the
level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value
measurement in its entirety. Thus, a Level 3 fair value measurement may include inputs that are observable (Level 1 or Level 2)
and unobservable (Level 3).
The following table provides a summary of changes in fair value of Level 3 financial assets and financial liabilities held
at fair value at December 31, 2008:
Year ended
December 31, 2008
Fixed Maturities
(in thousands)
$ -
Transfers in and/or (out) of Level 3 4,705
R
ea
li
ze
d
(l
osses
)
ga
i
ns
i
nc
l
u
d
e
d
i
n earn
i
ngs (1,721)
$ 2,984
The amount of total losses for the period included in earnings
attributable to assets still held at December 31, 2008 $ (1,721)
Fair value at December 31, 2007
Fair value at December 31, 2008
Losses included in earnings are reported in net realized investment gains and losses.